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Greece Stops Paying Bills

Greek Finance Minister Evangelos Venizelos is a worried man these days

Strapped for cash and facing the prospect of being unable to pay workers without the next installment of rescue loans from international lenders, Greece has frozen payments to its creditors, but will keep sending out checks for salaries and pensions for now, government officials said.
That has led to a backup in overdue payments from various state departments, the newspaper Kathimerini said, and created cash flow problems. Greece desperately needs an 8 billion euros ($10.8 billion) installment due from the European Union-International Monetary Fund-European Central Bank Troika due this month, but that could be delayed after talks with the lenders broke down when they complained the government is dragging its feet on economic reforms.
“We are trying to ensure that the government will be able to continue functioning without problems,” Deputy Finance Minister Filippos Sachinidis said. Overdue payments by various government government entities, such as hospitals, social insurance funds and local governments were estimated at 6.5 billion euros ($8.8 billion) in July and the arrears are building, creating further tension with international markets already speculating that Greece will default on its loans. But Greek Finance Minister Evangelos Venizelos said, even as he imposed an emergency property tax to raise revenues, that Greece can return to a surplus and is not “bluffing” about its ability to rebound, despite the increasingly dire statistics.
Kathimerini reported that the Troika notified the government it will not send its inspectors back to Athens unless the Parliament moves quickly to adopt more austerity measures and pick up the pace of privatizing state-run entities and properties. Those prospects include reducing some workers pay by 40% and then firing them in a year, which threatens to set off new rounds of social unrest.
The Finance Ministry reported that the budget deficit widened to 18.6 billion euros ($25.2 billion) in the January-August period from 15.7 billion a year earlier – a 22.5% increase, further evidence that previous pay cuts and tax hikes have backfired, even as Greece wants to borrow more money to further increase its debts. Ordinary budget revenue fell to 31.1 billion euros ($42.2 billion) from 32.8 billion ($44.5 billion) while spending rose to 47.8 billion euros ($64.9 billion) from 43.5 billion ($59 billion.)

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